This week has been described as the most important week for financial markets so far this year.

Both the European Central Bank and the US Federal Reserve are in the spotlight as the two major global regulators are expected to embark on a change of course in the coming months.

The President of the ECB signalled yesterday that the bank could deploy additional stimulus measures having ended its extensive bond buying policy, known as quantitative easing, at the end of last year.

"Mario Draghi alluded to the euro zone economy needing more stimulus and there are two main reasons for that; inflation and manufacturing," Lee Evans, Head of Head of Foreign Exchange Trading and Strategy at Bank of Ireland Global Markets said.

"Inflation is the only needle in the compass for the ECB. They need inflation running at close to 2%. It's half that at the moment."

He said the manufacturing sector was experiencing headwinds from trade wars and tariff impositions.

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There are only two ECB policy meetings in the calendar before Mario Draghi leaves office.

Some commentators are looking to a possible rate cut in September.

This morning, the German lender Commerzbank said it believed an ECB rate cut could come as soon as next month.

Meanwhile, the US Fed wraps up its latest policy meeting tonight with some expectation of a rate cut in the coming months.

"There's a 20% chance of a rate cut tonight. Most expect it to be in July. A 25 basis point cut is almost fully priced in by markets," Lee Evans explained.

"The Fed had been in a rate hiking cycle. They've a lot further to cut as rates are at 2.5%. A 25 or 50 basis point cut is not of the question."

The Bank of England is now moving back into focus as the pound remains stuck at a five month low as the Conservative leadership campaign plays out.

"We've seen a decent move back towards 90 pence. Fears are growing once again of a no deal Brexit. The increasing likelihood of an election is also weighing on sterling. It will probably remain on the back foot until there is more clarity."